New York-listed Kosmos announced the discovery of some 16 trillion cubic feet of gas at its Guembeul-1 exploration well in the northern part of the Saint Louis Offshore Profond, straddling the border between Senegal and Mauritania.
While the announcement marks west Africa's biggest gas discovery to dare, and will offer a new potential source of revenue to both countries, which have struggled amid declining commodity prices and weak foreign investment, PGI said there was "significant" potential for delay since Mauritania and Senegal will still need to negotiate ownership of the resource.
Kosmos has inked a memorandum of understanding with Senegal and Mauritania's national oilers Petrosen and Societe Mauritanienne des Hydrocarbures et de Patrimonie Minier (SMHPM) to develop the field, a revenue-sharing formula between the two countries and Kosmos is yet to be finalised.
There are also uncertainties around oil and gas regulations in both countries that could also impede development.
Kosmos made two smaller discoveries off the coast of Mauritania in April and November 2015, and the latest find will raise hopes of further high-quality reserves in the Greater Tortue Complex, where Kosmos is now estimating there are 17Tcf, up from 14Tcf previously.
Kosmos believes the find also significantly de-risks the prospects of adjacent blocks and has proven the existence of high quality reservoirs in the underlying Albian.
The discovery is particularly important for the future of oil and gas in Senegal, where more than 140 offshore wells have been drilled since the 1950s but until proven reserves have been limited, until recently when Cairn Energy, ConocoPhillips and Australia's FAR made the SNE and FAN oil disdoveries.
Kosmos holds a 60% interest in the Guembeul-1 well, along with Timis Corporation (30%) and Petrosen (10%), but PGI said it was unclear how Mauritania would benefit from the initiative unless this arrangement was renegotiated.
"The complexity of the negotiations of gas sharing, of which there is no specific precedent between the two countries, means negotiations could be drawn out and delays are possible," PGI said.
"No timeline has yet been set for when these issues will be resolved, leaving the project timeframes vulnerable to complex and politically charged bilateral negotiations."
Then there is the fact that Senegal has no significant oil and gas production in its background, and Mauritania, despite the hype of the early 2000s, has only modest production, and has proven to be a difficult jurisdiction to do business at times.
Woodside was involved in production at Mauritania's offshore Chinguetti oil field in the early 2000s and made a number of other discoveries, but eventually sold its assets in 2006, saying Mauritania was a difficult jurisdiction to work with complex geology, and that Chinguetti was no longer profitable.
The sale came after the company was forced to pay $US100 million as a "project bonus" to the new Mauritanian authorities following another coup.
A separate corruption case launched by the Australian Federal Police into Woodside's operations in Mauritania also cast doubt on the feasibility of the project.
Senegal's regulatory environment is also a potential stumbling block, as the government is looking to to revise its outdated 1998 Petroleum Code.
While Petrosen has put out a tender for a consultancy to help revise oil regulations in December 2016, with the winning company expected to complete its study within six months, no news has been made public on how the consultancy process is progressing or when a new petroleum code will be delivered.
Understandably, some local regions want more involvement in decision-making in the oil and gas sector and for the greater allocation of oil revenues.
PGI says these complex political debates will mean the Petroleum Code could be subject to long periods of review that could affect project timelines.
"Presidential elections scheduled for 2017 will further complicate this process and could lead to changes of key personnel responsible for negotiating contracts with companies, as well as those responsible for the revenue-sharing negotiations with Mauritania, if those talks continue that long," PGI said.